3 Secrets to Successful On-Demand Startups
Priti Rao
The on-demand economy is not new. Our villages have had them for hundreds of years, when the local hairdresser came home to give you a haircut. These were the opening remarks by VC Shervin Pishevar at the On-Demand 2015 conference in San Francisco. He added that these traditional economies were powered by “trust, reputation and a frictionless way of paying each other.” Trust and reputation are no doubt the building blocks of the on-demand economy, but what else is needed to thrive in today’s competitive market? Here are some lessons from investors and entrepreneurs who spoke at the event.
1. Better, not just faster
The modern on-demand services started with the promise of speed and convenience. That’s table stakes now. Zero cognitive load to users combined with a value-added experience is the mantra for new entrepreneurs. Take Sprig for example. CEO Gagan Biyani said he wanted to “make dining better, not just the ordering.” Tri Tran of Munchery said people visit his site for
daily food inspiration even when they’re not ordering. Classpass is as much about discovering new styles of fitness as it’s about access to multiple gyms. Instacart’s trained shoppers pick produce that’s just right for you, while BloomThat helps you make impact in the right moment through timely, hassle free flower delivery. Alfred’s Marcela Sapone believes these are not just frivolous experiences for a few, nor are they replacements of everyday tasks. Instead they’re additives that simply make things better.
2. Scale humanity with technology
The on-demand economy has given rise to the ‘Uncollared Worker’, one with all flexibility and no benefits. Supply not demand will be the challenge for growth said co-CEO Dan Teran of ManagedbyQ. As someone who spent months cleaning offices, Dan knows the value of good employees and building communities. At Q they’ve built-in workflows that encourage employees to send new ideas, that make them feel part of innovation and
not just a cog in the cleaning machine. The experience of on-demand services is as much offline as online, and employees are a key interface. Kira Wampler of Lyft said their focus is “on scaling not just the technology, but how people (drivers and customers) treat each other.” Empowering employees to do what technology could never predict will be the key to delighting customers, as well as building tools that help scale humanity.
3. Copy tools, not others
Gone are the days of monolithic centralized corporations. Today’s on-demand startups, Simon Rothman argued, need to be more nimble and networked and quickly figure out what bits are to be done by people versus technology, and in-house versus outsourced. Antony Brydon, CEO of the freshly funded Directly noted, “the choice is between the pain of experience versus the pain of cost.” One solution he said is to have expert users to answer customer queries as Airbnb and Pinterest have started doing. While scale and density are needed for faster, cheaper customer service, going big
too quickly might leave you weak. Whether your business is virtual (like Facebook which is network-driven) or operational (like Shyp needing feet and physical assets on ground) will dictate how quickly you can expand to a new city. Cut-copy-paste is lazy. That doesn’t however mean you can’t use third party tools. Using them will only save you improvement costs in the long run while freeing you to focus on your differentiators in the short run. As MeUndies did when it partnered with Postmates to deliver it’s on-demand underwear service in L.A.
In the future the on-demand economy will expand to all kinds of new verticals from health and wellness to beauty services, personal finance and even government on demand. Semil Shah predicts that we’ll move from a phone to an app to a device input (Amazon’s dash button). The important thing Pishevar maintained is to find your unique pain point, and turn that into joy for others. In the process you might just end up democratizing access to premium services at less premium prices, while helping your Lyft driver become the next dance teacher.
Edits by @tinabarseghian
